Rains force ERA uranium plant shutdown

Pure uranium play
Energy Resources of Australia
has become the latest victim of the heavy rains plaguing much of eastern Australia, advising that it will have to shut down its processing plant for 12 weeks, preventing a widely expected increase in output this year.

ERA’s Ranger mine in the Northern Territory has suffered from higher-than-average rainfall since October, taking water levels at its tailings storage facility close to maximum levels.

As a result, ERA will have to temporarily suspend processing operations to cut inflows into the facility and provide extra capacity to cope with the expected above-average rainfall for the rest of the wet season, the company said on Friday.

Meanwhile, ERA, majority owned by Rio Tinto, reported an 83 per cent slump in full-year net profit to $47 million, weighed down by a shortfall in production that forced it to buy 925 tonnes of material in the spot market to help satisfy customer contracts. The result was also hit by a $5.8 million write-off of investment in a trial water treatment process.

ERA had already warned in December that its net income for 2010 would fall to between $45 million and $55 million, from $272.4 million the previous year.

Sales for the full year slid 26 per cent to $572 million on sales volumes that fell 8.6 per cent to 5026 tonnes. Actual production dropped 28 per cent to 3793 tonnes. Lower realised uranium prices and the stronger Australian dollar also hit revenues.

Because of the plant shutdown, ERA is now forecasting 2011 production of uranium oxide will be flat with last year’s, although actual output will depend on the level of rainfall received during the rest of the wet season.

But ERA said it didn’t currently anticipate it would be forced back into the spot market to meet contracts because it should be able to supply customer commitments through product swaps and loans, and from already arranged spot-market purchases.